Housing market and the economy - (Page 1 of 6)
Interest rate changes tipped to shape 2024 real estate market
Our survey reveals that more than 7 in 10 (71%) real estate professionals see fluctuations in interest rates as being the most significant influence on the real estate market in 2024. Notably, 59% believe rising interest rates will have the most impact, while 12% anticipate a notable effect from falling rates.
At the local level, the most significant stressor for businesses was identified as the low supply of house stock, with two in five (41%) raising this concern. Following closely, 38% pointed to high interest rates and inflation rates as additional challenges.
Housing market and the economy (Page 2 of 6)
Slight uptick in economic growth and house prices
Despite the expected fluctuations in the interest rates, the majority of property professionals expected 2024 to be positive with 57% expecting some economic growth. A good portion foresee a rise in house prices, with 46% expecting a modest increase of 1-5%, and an additional 13% anticipating a more substantial rise of over 5%. Meanwhile, 16% hold the belief that house prices will decline.
Survey results are relatively in line with where housing market performance currently forecast by the major banks. “The broad expectation for housing values in 2024 is that the market will still grow, but at a slower rate than the 8.1% observed in 2023*. Growth in housing demand is expected to slow amid higher cost of living pressures, a higher tax take from bracket creep, and high interest rates,” says Eliza Owen, Head of Australian Research at CoreLogic. “This means less savings to put toward housing purchases - indeed the latest national accounts data from the ABS showed the household savings ratio had fallen to its lowest level since 2007. Consumer sentiment remained very low at the start of 2024, which can also signal households being hesitant to make high-cost, high-commitment decisions.
Despite some of the headwinds for market demand, growth is still expected to be positive throughout 2024. Ongoing constraints in the construction sector are likely to keep a floor under home values, with the number of completions trending lower throughout 2023.”
Eliza Owen continues, “There remains a strong mismatch in the supply and demand of dwellings across Australia, and anything that makes buying more accessible, such as a reduction in interest rates, would likely boost buyer numbers. With inflation currently trending just below RBA forecasts, the case for a cash rate reduction is firming up in 2024.”
Real estate industry insights (Page 3 of 6)
What’s important in 2024? More face-to-face interactions and improve CRM nurturing
Survey participants widely agree on the importance of dedicating more time to face-to-face client interactions, with 8 out of 10 recognising its significant value.
To build their brand and drive new business, 49% see nurturing their CRM database through emails, SMS, and calls as the most effective strategy.
The second most crucial goal of 2024 was better utilisation of the data within their CRM with over two-thirds (67%) highlighting its importance. This consistent theme of better database management and client nurturing indicates that agents see this as a key differentiator for their success in 2024.
Our research at CoreLogic indicates that 97.5% of CRM databases haven't received a connected phone call in the past year. "This presents an immense opportunity for businesses, leveraging this untapped data can help build stronger relationships with contacts, support your brand, and drive new business", said James McGregor Head of solution sales at CoreLogic.
Improving prospecting culture amongst the team made up the top three goals for 2024, "My experience working with agents is without that culture of continuous nurturing of your database and not keeping in touch with your warmest leads is the simplest way to lose momentum and a more stable GCI." Mr McGregor.
Real estate industry insights - (Page 4 of 6)
Investing in proptech: Meeting challenges head-on
Over a third plan to tackle their goals and challenges by increasing spend on proptech solutions in 2024, aligning with the expected compound annual growth rate of the proptech market at 9.3% from 2023 to 2033**.
A helping hand, not a hindrance
Dr Sarah Bell, Principal, Innovation and Industry emphasises the role of proptech as an aid to agents rather than an impediment, cautioning against technology pulling agents away from the local marketplace: "One of the consequences of the explosion of proptech in real estate is that it has taken agents away from the driveways and pathways of their local marketplace and put them behind a screen, which is not where their customers want them to be."
Dr Bell believes technology should take the lead, guiding agents rather than introducing a new burden of excessive effort on a software interface: "Some things are uniquely human that we do best, and things that humans better delegate to expert systems. In those situations, tools should take the lead, guiding agents, rather than agents being burdened with guiding the tools."
** Future Market Insights https://www.futuremarketinsights.com/reports/proptech-market
Real estate industry insights - (Page 5 of 6)
Social media trumps traditional, by a long way
Behind nurturing their database, social media engagement was the second most recognised priority for building brand awareness and new business with 29% endorsing its effectiveness. In contrast, traditional advertising methods such as billboards and print ads received only 4% of the overall vote, indicating that they now have a lower perceived impact on brand building and new business generation.
There is a notable shift in brand-building preferences with more sentiment towards digital and social media vs traditional marketing methods: Mr McGregor added "Consumers now spend around 2 hours a day on social media. It's no surprise that they see this method as far more impactful than traditional media of the past."
Mixed success across key digital metrics
Measuring digital marketing success varies. While confidence exists in overall social media performance, 57% lacked full oversight on ad ROI, and 55% found audience preferences unclear. This shows the challenges in understanding platform intricacies and demonstrating results to vendors.
Real estate industry insights - (Page 6 of 6)
The vast majority seek more from digital and social
61% aim to bolster their digital and social presence, reflecting a notable drive for improvement. Notably, 69% of agencies manage social media in-house or through a hybrid model, underlining the increasing importance of internal management for shaping business branding and property listings.
Not only do these statistics highlight the desire for improvement but also emphasise the commitment to keeping the work in-house. The growing reliance on in-house and hybrid models signals a strategic shift in how agencies approach their digital marketing efforts. CoreLogic General Manager - Real Estate Solutions, Dirk Miller, said "Agencies are increasingly leaning towards in-house social media marketing, and we see a growing need for support in this area".
Proptech solutions can help bridge the knowledge gap, empowering agencies to efficiently manage and optimise their campaigns, ultimately achieving greater success in the quest for a stronger digital and social presence. Mr Miller agrees with the pivotal role proptech solutions can play, "Empowering agents with tools like Plezzel is crucial. It helps them execute successful vendor-paid advertising campaigns and stand out from competitors through impactful brand awareness efforts."
Conclusion
Covering crucial aspects such as the economy, housing market, and customer goals, the Decoding 2024 report uncovers key insights on the real estate landscape. Notably, it emphasises the industry-wide belief that shifts in interest rates will impact the real estate market, with a slightly positive outlook on house prices despite economic uncertainties.
It revealed the aspirations and challenges of the real estate sector, with a notable focus on building a stronger brand through customer nurturing. These results reflect a shared commitment among professionals to invest more time in face-to-face interactions, recognising the importance of these connections for success. Mr Miller concluded, "Low levels of stock and deepening customer relationships are weighing on the minds of our customers. This will make smart prospecting, maximising the untapped potential of their databases, and building a stronger brand pivotal to success through 2024 and beyond”.
Additionally, the results bring light to the adoption of proptech solutions when navigating the challenge of digital and social media needs with a trend toward improving in-house capabilities.
Survey Sample Data:
The survey respondents are a combination of customers across CoreLogic's real estate products and industry peers subscribed to CoreLogic communications. A full sample size of up to 1435 was collected, and fielded from December 2023 to January 2024.
CoreLogic Australia